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What recent investment allocation changes has your firm made?
We held a sizable allocation to gold in our growth strategy through 2022, so heading into 2023 we allocated half the gold position into international developed markets toward the beginning of 2023 and into U.S. large caps in the second quarter. Our trade was motivated by valuation. International large caps were cheap, and their currencies were relatively cheap compared to the dollar. U.S. large caps were “fairly” priced when we made the allocation. We shifted the funds into high quality companies with a long track record of dividend growth.
What’s your top contrarian pick at the moment?
Our favorite pick nowadays is private credit. We like the quality and the floating rate nature of the coupon. It’s currently paying between 11.5% and 12%.
In what areas of the market are you taking risk off?
We are not allocated in low-quality, particularly junk bonds. Nearly three-quarters of a trillion dollars of debt is coming due in that space in the next five years, with current coupon rates nearly three percentage points below current rates.
In what areas of the market are you putting risk on?
We like equity risk, both public and private. Our focus is quality on the public side and cash-flowing businesses in economically insensitive sectors on the private side.
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